ATO cracks down on online sellers

The Tax Office plans to crack down on thousands of internet businesses to identify those dodging their tax obligations, potentially reaping a revenue windfall for the government.

Australian Taxation Office algorithms will comb the records of the 11,000 largest online sales businesses to identify non-compliance with lodgments, payments and reporting obligations.

Internet business proprietors can expect the ATO to know all about them. It claims it collects the “name, address, telephone numbers, date of birth, email address, registration date, number of monthly sales, value of monthly sales, the Australian Internet Protocol address, and bank account details of sellers".

Institute of Public Accountants senior tax adviser
Tony Greco
said it was impossible to know how much revenue the program might raise.

“No one puts a figure on the black economy . . . It’s very hard to quantify the extent of transactions not being reported."

But he said the crackdown had longer-term benefits.

“There is a bit of pressure financially to bring in as much money [as possible] but it’s also being seen to be doing something about people that have businesses that don’t report any tax obligations. These people could be in receipt of social security," he said.

“It sends a strong message to the community that even though you might not think the ATO is watching . . . there is a chance they could fall foul of the ATO."

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The “online selling data matching program" will focus in particular on undeclared incomes and incorrect reporting of GST.

In 2011, the number of sellers making million-dollar revenues through eBay grew 37 per cent to 157.

The crackdown does not appear to include fast-growing selling website Gumtree, owned by eBay. It specifically notes it will not address websites that “only put the vendor and purchaser in touch with each other".

News of the crackdown may bring some relief to bricks and mortar retailers concerned about the unfair playing field created by any online sellers not fulfilling their tax obligations.

The Tax Office is strictly independent of government, so the initiative is not a political sop, said Tax Institute senior tax counsel
Robert Jeremenko
. He said the government depended on the ATO to raise as much money as possible from existing law to avoid being forced to institute new taxes.

“It is not just bluff and bluster," Mr Jeremenko said. “It will certainly be a lot more focused than they have in previous years."

The program doesn’t solve one major gripe of retailers – the GST-exempt status of online purchases valued at under $1000.

The Australian National Retail Association chief executive
Margy Osmond
said last week it was an issue governments could not afford to ignore.

A report from consultants Ernst and Young found government could raise an extra $1 billion a year in tax if they removed the GST exemption on imports.